Good morning, and welcome to Rockwell Medical's Second Quarter 2022 Results Conference Call and Webcast. Please note, this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, SVP and Chief Affairs Officer at Rockwell Medical. Heather please go ahead.

Good morning, and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Dr. Mark Strobeck, Rockwell's new President and CEO; and Russell Skibsted, Rockwell's Chief Financial Officer and Chief Business Officer.

During today's call, Mark will provide an update on Rockwell's second quarter achievements as well as an overview of the company's strategy going forward. Then Russell will discuss Rockwell's financial results. After that, we will open the lines to take your questions. .

Before we begin, I would like to remind everyone that this conference call will be -- will contain forward-looking statements about Rockwell Medical within the meaning of the federal securities laws including, but not limited to, the types of statements identified as forward-looking in our annual report on Form 10-K and our subsequent periodic reports filed with the SEC which are all available on our website under the Investors section.

These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions and expectations only as of today.

Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events.

Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our periodic reports filed with the SEC. A recording of this conference call will be available on Rockwell Medical's website under the Investors section.

At this time, I would like to turn the conference call over to Rockwell Medical's President and Chief Executive Officer; Dr. Mark Strobeck. .

Thank you, Heather. Good morning, everyone, and thank you for joining us for Rockwell Medical's Second Quarter 2022 Results Conference Call and Webcast. My name is Mark Strobeck, and I am pleased to be presenting to you today as Rockwell's new President and CEO.

Rockwell is a commercial health care company focused on providing life-sustaining products for patients suffering from blood disorders and diseases associated with the kidney. Rockwell is a revenue-generating business, We are the second largest supplier of acid and bicarbonate concentrates for dialysis patients in the United States.

Our Ferric Pyrophosphate Citrate, otherwise referred to as FPC brings a potential opportunity to treat patients with iron deficiency anemia in the home infusion market and to treat patients suffering from acute heart failure.

And we have the opportunity to unlock the value of our manufacturing and development expertise by potentially adding new and exciting product opportunities to our portfolio.

I am aware that this isn't the first CEO transition the company has experienced, and I am mindful of the impact that this has had on the company its employees and its stockholders. While there is much work to be done, I'm incredibly impressed with the Rockwell team.

Their deep expertise in our core business and the initial progress we have recently made to improve the financial health of the company. I look forward to working with our Board of Directors and the talented Rockwell team to continue to build upon this momentum.

I believe that in order for us to stabilize and grow our business and be effective as an organization going forward.

We need to drive profitability in our hemodialysis concentrates business and our business overall to continue to explore opportunities to develop FPC in alternative settings and support our international partners to develop and commercialize Triferic outside the United States.

We need to develop, in-license and/or acquire additional product lines in support of our concentrates business and develop in-license or acquire new pharmaceutical products to bolster our emerging pipeline. And lastly, we need to continue to manage our cash resources, delever our business and place Rockwell on firmer financial footing.

We need to do all of this in much more. However, these efforts will be guided by a few essential tenants. We must always put the patient first. We make a number of important and, in some cases, like sustaining products.

Our commitment to quality and efficiency in our production is going to be paramount for our success and help us address the needs of our patients. Our job at Rockwell is to deliver results. Everything we do will add value and contribute to our goals and objectives.

Now let me take some time to provide you with specific business updates that took place during the second quarter 2022. First, let's look at our asset in concentrates business.

Hemodialysis is the most common form of end-stage renal disease treatment and is usually performed at a freestanding outpatient dialysis center at a hospital-based outpatient center or at a patient's home. There are approximately 500,000 patients who require in-center hemodialysis. Each patient receives approximately 3 treatments each week.

This represents a large market opportunity for which our products are well positioned to meet the needs of patients. Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates and is the second largest supplier of hemodialysis concentrates in the United States.

We manufacture our concentrates under CGMP regulations at our 3 facilities located in Michigan, Texas and South Carolina from which we deliver these products to dialysis clinics throughout the United States. We also manufacture mixers that are used by clinics in our Iowa facility.

At the start of 2022 we began an initiative to restructure our concentrates business. The first step of which was to expand our relationship with our largest customer, DaVita, which is one of the leading providers of kidney care services in the U.S.

During the second quarter of 2022, we successfully renegotiated our supply agreement and expanded our partnership with DaVita, which included a $15 million investment in Rockwell. We are excited to be working even more closely with DaVita to support their dialysis centers and the patients they serve.

Additionally, we continue to explore new ways to improve our supply relationship with Baxter and our international customers, all of which would afford us the opportunity to support more dialysis patients and make our concentrates business more valuable to Rockwell and its stockholders.

These efforts to restructure our concentrate business are now beginning to be positively reflected in our financial results. The second quarter 2022 generated the highest quarterly revenue to date for Rockwell.

We increased our top line revenue to $18.7 million in the second quarter of 2022, a 16% increase over the first quarter of 2022 and a 24% increase year-over-year over the second quarter of 2021. We plan to continue to drive top line revenue growth by adding additional clinics and further supporting our existing customers.

We are also working on a number of operational efficiencies and cost-cutting measures that we believe will rightsize our efforts for the revenue we generate while simultaneously being prepared for the future growth of this business.

These changes should ultimately translate into improved financial performance of our concentrates business as we drive our overall business towards profitability. We expect to have more to say about these changes in the coming months. Now let's turn to Triferic.

Triferic is an FDA-approved treatment indicated for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease. In the U.S., we continue to focus on serving our current customers.

As first reported in 2021, we made the strategic shift away from supporting Triferic with a full commercial organization for the U.S. and therefore, are in the process of seeking a U.S. partner that can apply the appropriate commercial efforts to support Triferic products going forward.

We are working diligently with our international partners to bring our products to market in their respective territories. Let me update you on the progress our partners have made. In South Korea, Jeil Pharmaceutical received regulatory approval for both Triferic and Triferic AVNU in January of 2022 from the Ministry of Food and Drug Safety.

Jeil confirmed that in July, they commercially launched Triferic in South Korea. We are excited to see our product making its way to patients and look forward to updating you on Jeil's progress to commercialize Triferic.

In China, our partner, Wanbang Biopharmaceuticals, enrolled the final patient in its pivotal Phase III clinical trial, 6 months ahead of schedule, totaling 442 patients. In Turkey, our partner Drogsan Pharmaceuticals, initiated the process required to gain regulatory approval from the central drug standard control organization.

Drogsan has applied and await for approval from an accelerated review process for Triferic with the Turkish regulatory authority. And in India, our partner, Sun Pharma, has a clear pathway forward with guidance from the Central Drugs Standard Control organization and is preparing to initiate the required clinical trial before the end of the year.

We will work to continue to work with our partners outside the U.S. to bring Triferic to the market. We believe this strategy will provide Rockwell near-term revenue that will positively impact our bottom line. FPC for home infusion is our follow-up to Triferic and utilizes the FPC platform in the home infusion setting.

Home infusion therapy, where various medications are given by infusion therapy in the home rather than at an infusion center, is a rapidly growing segment of home health care. Many patients who receive home infusion therapy suffer from chronic diseases that are associated with a high incidence of iron deficiency in anemia.

Current treatment options are not well suited for use in the home setting, and there are currently no approved intravenous therapies for treatment of iron deficiency anemia in the home. If approved, FPC would be the first intravenous therapy to treat iron deficiency anemia that is approved to be administered at home.

During the second quarter of 2022, Rockwell provided the FDA with supplemental data, including information on a new presentation of Triferic AVNU to be used in our clinical studies and to commercially support our investigational new drug or IND application.

The FDA has placed this product on clinical hold and requested that additional data related to microbiology and short-term stability of this formulation be provided to support the application. We engaged an outside organization to conduct these studies on our behalf. These studies are underway and should be completed in the third quarter of 2022.

In our R&D pipeline, we are also exploring FPC's impact on the treatment of hospitalized acute heart failure patients. We believe that FPC may deliver rapidly bioavailable iron to the heart and improve cardiac energetics during hospitalization.

This effect could help patients recover faster, resulting in shorter hospital stays and fewer 30-day readmissions. If so, these outcomes would translate into a meaningful reduction in health care costs and human suffering.

We will be submitting a pre-IND meeting request to the FDA during the third quarter of 2022 and expect to meet with the FDA during the fourth quarter of 2022. Finally, in addition to focusing on our base business, we are aggressively looking at ways to grow our business.

We are currently looking at new product opportunities to pair alongside our concentrates business, which would enable us to leverage our significant manufacturing and distribution capabilities and customer relationships. These opportunities could improve both our top line and bottom line.

Furthermore, we are evaluating new in-licensing opportunities for our pharmaceutical business, products that seek to treat diseases in our core therapeutic areas. We believe that Rockwell's future will include multiple products generating multiple revenue streams, and we look forward to sharing more on these opportunities on future calls.

As I discussed earlier, our goal is to drive our business to profitability to access near-term revenue through our existing Triferic business in the U.S. and outside the U.S., to develop longer-term revenue streams in the form of FPC for home infusion and acute heart failure and to initiate business development efforts.

All would provide longer-term sustainable growth for our business and support our mission to provide life-sustaining products for patients suffering from blood disorders and diseases associated with the kidney. Now I will turn the call over to Russell to provide you with our financial updates for the quarter.

Russell?.

Thank you, Mark. During the second quarter of 2022, Rockwell raised a total of $30 million, which included $15 million from our long-time partner, DaVita. As a result, our cash and cash equivalents as of June 30, 2020, was approximately $30.8 million.

This compared to cash and cash equivalents of $9.9 million at March 31, 2022, and $13.3 million at the end of 2021. As Mark mentioned earlier, the second quarter of '22 generated the highest quarterly revenue to date for Rockwell. Our revenue was $18.7 million for the 3 months ended June 30.

This represented a 16% increase quarter-over-quarter compared to $16.1 million for the 3 months ended March 31, 2022, and a 24% increase year-over-year compared to the $15.1 million for the 3 months ended June 30, 2021. For the second quarter of 2022, we realized a gross profit of $1.7 million.

This compared to a gross loss of $786,000 for the first quarter of 2022. The gross loss of -- I'm sorry, and a gross loss of approximately $262,000 for the second quarter of 2021.

The gross profit increased during the second quarter of '22 due to improved performance of our business, including price adjustments with some of our customers to reflect the changes in expenses associated with materials and inflation.

Our team's efforts to keep costs down during the second quarter of '22 is especially commendable in light of the fact that transportation costs during that quarter continued to increase at unprecedented rates nationwide.

Cash used in operating activities for the 3 months ended June 30, 2020, was $5.8 million compared to $9.8 million for the 3 months ended March 31, 2022, representing a 40% decrease quarter-over-quarter. During the second quarter of '22 Rockwell Medical affected a 1-for-11 reverse split of the company's issued and outstanding common stock.

The reverse split was primarily intended to bring the company into compliance with the minimum bid requirements for maintaining its listing on the Nasdaq capital market, which the company achieved on May 31, 2022.

Finally, we are committed to delevering our business with the payments made to Novartis over the quarter have reduced our debt to $16.5 million. and we expect to continue to reduce this over the coming quarters. I will turn the call back over to Mark for his closing remarks.

Mark?.

Thank you, Russell. Operator, please open the phone lines for any questions. .

[Operator Instructions]. Your next question comes from the line of Brandon Folkes. .

Congratulations on the progress and congratulations, Mark. Maybe just 3 from me. Sort of high level, how should we think about the 3 pillars, I guess that's my term rather, but just being the concentrates business, maybe Triferic in the pipeline.

In terms of driving value going forward, how should we think of each of those 3 contributing? And then maybe just can you just elaborate a little bit on the strong revenue we saw in the quarter.

Is this sort of fruits of these renegotiated contracts coming through? Maybe just any color in terms of any maybe just remind us when those renegotiated contracts kicked in, if they did, otherwise, any color on volume there? And then maybe lastly, just can you just elaborate a little bit on the FDA concerns on the home infusion program and sort of what they need to see to kind of move forward there? And maybe what you need to see to move that program forward yourselves as well?.

Great. Thanks, Brandon, for the questions. Yes, so let me address each one. So the way that we think about our business is really, as I mentioned earlier, we're trying to drive profitability of our overall business.

And therefore, we're looking to maximize the value of our of our sort of 3 sort of areas of focus, right? First is the concentrates business, right? As you can see from the quarter, we're making significant improvements through the restructuring of that business. And we think on a short-term basis, that's what's going to help us drive profitability.

In the near term, right, we're looking at Triferic as an opportunity, right? It's registered and being commercialized in the United States as well as our existing relationships with our international partners will. As that product is further developed and approved, will start to generate additional revenue for the company here in the near term.

And then the longer-term opportunity is with the FPC platform in home infusion and acute heart failure. So that's how we're sort of thinking about it. And the next question, I think you've asked is around the increase in revenue over the quarter.

So as you probably have seen through some of our public announcements, we've undertaken a path to restructure that business, right? We've renegotiated our supply arrangement with DaVita. We're continuing to work to improve our relationships with our existing customers. And as a result of that, we're seeing this meaningful improvement in revenue.

This primarily results from a couple of things. Again, one is additional volume that is being sold as more and more clinics need our products. But secondly, and probably more importantly, is the adjustments that were made to these agreements to reflect price.

As our material costs have increased as inflation has impacted our business as the cost of distribution has increased. We've altered our pricing scheme, and that has allowed us to adjust accordingly based on those changes. And then the last question, I believe, was around the FPC home infusion program. So we're taking this in a systematic way.

The agencies question as it relates to this formulation because it's a new formulation and is generated effectively through a compounding strategy of our Triferic AVNU product, the agency has asked as it typically does in formulation situations like that for stability studies and microbiology studies. It's not unusual for the agency to request that.

And so we're carrying out those studies based on the results of those studies. If this is a formulation that we can then move forward, we will then refile our IND application and seek to begin our clinical development work.

If we are -- this formulation, obviously, is does not meet the standards that the agency requires then we're going to need to effectively reformulate and that could then potentially delay the start of our clinical work. So hopefully, that answered your questions, but I appreciate the questions, Brandon. .

Your next question comes from the line of Ram Selvaraju. .

I think we're having technical difficulties getting to Ram. .

There are no further questions at this time. I now turn the call back over to Dr. Strobeck. .

Thank you, operator, and thank you, everyone, for joining us on today's call. It was a pleasure to introduce myself and provide you with an overview of our second quarter achievements and the tremendous opportunity that lies ahead for Rockwell.

I want to thank Rockwell's employees for their continued commitment and dedication during what has been a challenging time. We are in the business to make products that impact a patient's life. This is our passion, and we take this responsibility very seriously.

We made a number of improvements in our business, but recognize that there is still a lot of work ahead of us. We are inspired by that challenge and look forward to sharing our progress along the way. .

This concludes today's conference call, you may now disconnect..